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Renewables need storage, and pumped-storage hydro provides it. Will these projects help Colorado achieve its decarbonization goals?


Parts of this story were originally published by Fresh Water News, a production of the Colorado Foundation for Water Education.


by Allen Best

Two proposed pumped water storage projects—one in near Penrose in Fremont County and another between Hayden and Craig in the Yampa River Valley—are moving forward. Pumped-storage hydro could expand Colorado’s ability to store renewable energy.

Provision of the Inflation Reduction Act of 2022 make the financing of these and other pumped-storage projects more attractive.

Pumped-storage hydro projects allow energy to be stored then released as needed to generate electricity. Colorado will need far more energy storage than exists now if it is to attain its mid-century goals of 100% renewable energy.

This technology even today is responsible for 93% of energy storage in the United States, according to the U.S. Department of Energy.

Lithium-ion batteries are part of the answer of how to provide reliability. They are being rapidly added to supplement wind and solar in Colorado. Xcel Energy, for example, plans to have 275 megawatts of battery storage on-line by late this spring. Xcel plans another 125 megawatts in coming years. Other utilities also have batteries or plan to acquire them.

These batteries typically have a capacity of just a few hours. Xcel Energy has partnered with Form Energy to begin testing a new technology call iron-air at its Comanche Generating Station in Pueblo in 2025. That technology has 100-hour capacity.

Today, Colorado’s largest energy storage is a 324-megawatts pumped-storage project called Cabin Creek Generating Station. Opened in 1967 (with slightly smaller capacity), it consists of two reservoirs, the higher one at 10,018 feet above Georgetown and then a lower reservoir. The water is released from the higher reservoir as needed to meet Xcel’s mid-day peak demands, then pumped uphill when energy is cheap and relatively plentiful.

See: “Hydro at 10,000 Feet: Modernizing the Renewable Infrastructure.”

Two smaller pumped-storage units are located near Leadville.

Pumped water storage has been refined in recent decades but the basic principles remain unchanged since the first U.S. project went on line in New Milford in 1930. The first pumped-storage facility in the world was built in 1909 in Switzerland.

“These pumped-storage projects are anathema to the modern way of thinking,” says Peter Gish, a principal in Ortus Climate Mitigation, the developer of the Fremont County pumped water storage project.

“But once built and operating, the maintenance costs are very, very low, and the system will last, if properly maintained, a century or longer. The capital investment up front is quite high, but when you run the financial models over 30, 50 or 60 years, this technology is, hands down, the cheapest technology on the market for storage.”

Ortus Climate Mitigation wants to build a 500-megawatt pumped water storage facility on the South Slope of Pikes Peak above the town of Penrose in Fremont County.

Gish hopes to have a permit from the Federal Energy Regulatory Commission in 2026. Construction would take up to five years after the permit is approved.

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In the Yampa Valley, another developer continues to plug away at a potential application for a site somewhere between Hayden and Craig. Still another idea is said to be in formulation in southwestern Colorado, but no details could be gleaned about that project.

Phantom Canyon, as Ortus calls its project in Fremont County, would require 17,000 acre-feet of water for the initial fill of the two reservoirs to be augmented by about 1,500 acre-feet annually due to losses from evaporation.

The company says it has accumulated water rights.

Gish, a co-founder of Ortus, says his company is “keenly aware” of water scarcity issues in Colorado and looks into ways to reduce the evaporative loss and hence shave water needs. One option is to place solar panels over the reservoirs, producing energy while shading the water. On a vastly smaller scale, that has been done at the Walden municipal water treatment plant in north-central Colorado.

Unaweep Canyon, 2022. photo/Allen Best

Xcel Energy had considered a pumped-storage project involving Unaweep Canyon, southwest of Grand Junction, but abandoned it. 2022 photo/Allen Best

Unlike an unsuccessful attempt by Xcel to build a pumped water storage project in Unaweep Canyon on federal land in Western Colorado, the Ortus project near Pikes Peak would involve only private land. The company has exclusive purchase options for 4,900 acres. It also has secured 12 easements for pipeline access from the lower reservoir to the Arkansas River.

Proximity to water sources matters, and so does the location relative to transmission. Penrose is about 30 miles from both Colorado Springs and Pueblo and major transmission lines.

The company last year laid out the preliminary plans with Fremont County planners and hosted a meeting in Cañon City to which environmental groups and others were invited. By then, FERC had issued a preliminary permit ,which is the start of the permitting process. Gish, who has worked in renewable energy for 25 years, says no potential red flags were noted.

“I have found that the local stakeholders are the first people you need to talk to about a project like this,” Gish says. “If you are able to get local support, the rest of the pieces will tend to fall into place. If not, the rest of the process is a much more difficult proposition.”

In Western Colorado, Xcel faced local opposition but also the more daunting process of permitting for a project on federal land.

In the Craig-Hayden area, Matthew Shapiro, chief executive of rPlus Hydro, had been examining sites that are on private land. Work continues on geological assessments and other elements, but he says that a “lot of other pieces need to come together before there is real progress.”

In addition to having water, that portion of the Yampa Valley also has the advantage of transmission lines erected to dispatch power from the five coal-burning units that are now scheduled to close between 2025 and 2030.

Shapiro hopes to also use Colorado-sourced water to generate electricity in a pumped-storage project on the North Platte River in Wyoming. In January, rPlus Hydro, filed for a license application with FERC for the project on Seminoe Reservoir.

“Very few projects have made it that far since the turn of the millennium. It’s a pretty big deal,” Shapiro said.

In May 2022, FERC reported 27 licensed pumped storage projects. Of them, 24 with a combined capacity of about 16.5 gigawatts are in operation.

Pumped-storage projects have been boosted by provisions of the Inflation Reduction Act. It includes a new 30% investment tax credit for energy storage technology and a 10% domestic-content bonus tax credit and a 10% energy community bonus tax credit.

The IRA’s investment tax credit is a first for pumped-storage, says Shapiro. And in the case of the Craig-Hayden project, the project would qualify for an additional bonus tax credit due to its location near retiring or retired coal mines and/or coal generating stations. “The same applies to our Seminoe project in Wyoming,” he says. “The investment tax credit, in effect, helps lower the cost of energy storage to the utility customers and thus to the ratepayers.”

See also: “A biggest ever for battery storage in Colorado,” Big Pivots, Nov. 2, 2022

Allen Best
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